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Saturday, August 16, 2008

Benefit/Cost Analysis and Quality Assurance

When are the added costs of a project worth the expense? Weighing the benefits against the costs is something every project manager must do.

When it comes to quality assurance, performing a benefit/cost analysis can help with major decision-making issues of a project. You can use this quality assurance technique when assessing the procedures your company uses, so you can develop the level of products and services customers demand.

A benefit/cost analysis entails estimating the benefits and costs of meeting quality requirements, and then assessing the available project options. The main reasons for using benefit/cost analysis to determine project quality requirements are that this technique can result in:

less rework

higher productivity

lower overall project costs

improved customer satisfaction.

When using a benefit/cost analysis to help with decision making, you should keep in mind that it's really as simple as this—the benefits should outweigh the costs. The calculated difference of subtracting the costs from the benefits should be a positive number. The procedure for analyzing benefits and costs for quality assurance are listed below.

Analyze the plan, decision, or process by examining its activities and events.

Calculate or estimate the benefits and costs related to each element.

Subtract the costs from the benefits.

Benefit/cost analysis is a valuable tool that can help you determine if benefits outweigh costs. Ultimately, it can help you make important decisions relating to project quality assurance.